Owning a house – part of the American dream, right? Well, it could be. Here are some factors to consider before buying a home:
⦁ Do you have a significant amount of high interest rate debt?
⦁ Do you still have a high balance of student loans?
⦁ Is it possible, for any reason, you would move in the next 3-5 years?
A “yes” answer to any of these probably points to renting for the time-being. You would likely be better served to put a plan together to pay down these debts first and wait until your current situation is more stable before you buy.
Let’s say you have been able to stabilize your debts, loans and are happy with where you work and live. You believe you are ready to purchase your home. Congratulations! You have done a great job of moving yourself forward to financial independence.
As a Veteran, you have some unique benefits when purchasing your home.
⦁ 100% financing – no money down.
⦁ Don’t have to pay private mortgage insurance (PMI). Normally, people buying a home that do not have a down payment of at least 20% have to pay this insurance.
⦁ VA appraisal – helps ensures the home is safe, sound and sanitary.
⦁ Many state and local tax authority allow for tax relief for Veteran home purchases. Work with your lender and real estate agent for these possible benefits.
So, what are the first steps you need to take?
⦁ Apply for your Certificate of Eligibility (COE). Go online at https://www.va.gov/housing-assistance/home-loans/how-to-apply/ or contact your local VA Office.
⦁ Look at your current finances. Go over your credit profile, income, expenses, and monthly budget to make sure you’re ready to buy a home. Decide how much you want to spend on a mortgage—and be sure to include closing costs in the overall price.
⦁ Choose a lender. Lenders offer different loan interest rates and fees, so shop around for the loan that best meets your needs. Be prepared to pay lender fees. Many lenders charge Veterans using VA-backed home loans a 1% loan origination fee. If you are a disabled Vet, you do not pay the loan origination fee.
⦁ When looking at interest rates, now is an amazing time! Below is the historical look at interest rates. Notice that current rates are the lowest in over 40 years.
Average Rate for a 30-year Fixed Mortgage Interest Rate
⦁ Find an experienced real estate agent. Look for an agent who has been working in your desired neighborhood. Ask friends and family for references.
At this point, your real estate agent and lender can advise you on the process. Remember, owning a home can be rewarding and exciting if you plan ahead.
Mary Sprague, NAAV Senior Financial Advisor; email: email@example.com